“Cyber Fraud Is a Social Wrong, Not a Private Dispute; Compensating the Victim Cannot Buy Quashing of FIR”: Punjab and Haryana High Court

Case Name: Arpan Tyagi and Another v. State of Haryana and Another

Date of Judgment: 7 September 2026

Citation: CRM-M-68797-2025

Bench: Hon’ble Ms. Justice Shalini Singh Nagpal

Held: The Punjab and Haryana High Court held that cyber fraud cannot be treated as a private or personal dispute merely because the accused has compensated the individual complainant and secured a compromise. Cybercrime is a social wrong carrying serious consequences for digital infrastructure, the integrity of financial systems and public confidence in electronic transactions. Its impact extends beyond the immediate monetary loss suffered by an individual victim.

The Court observed that online frauds are capable of being committed across jurisdictions against numerous unsuspecting persons. The sophisticated technological methods used by offenders make their detection, investigation and recovery of criminal proceeds increasingly difficult. Therefore, the modus operandi employed in a cyber-fraud case cannot be confined to the compartment of an individual wrong amenable to private settlement.

The Court categorically held that payment of compensation to the complainant cannot constitute a sufficient basis for quashing cyber-fraud proceedings through the exercise of inherent powers under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023. Quashing such an FIR merely because the immediate victim has been reimbursed would be contrary to the interests of justice and society at large. In cybercrime, the ultimate victim is the collective, since such offences endanger the financial interests of society and undermine trust in digital transactions.

The Court further held that where several persons are alleged to be involved but only some of them have been identified or prosecuted, a settlement with the available accused amounts to a partial compromise. Such a compromise cannot bring the entire criminal prosecution to an end, particularly when the identity and role of the remaining accused are yet to be conclusively determined.

Summary: The petitioners approached the Punjab and Haryana High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, seeking quashing of FIR No. 227 dated 22 August 2025, registered under Section 318(4) of the Bharatiya Nyaya Sanhita, 2023 at Police Station Cyber, District Gurugram, Haryana. Quashing was sought on the basis of a compromise allegedly entered into with the complainant.

The FIR was registered on the complaint of Sushil Kumar. According to the complaint, on 20 August 2025 he received a telephone call from a person who asked whether he was interested in obtaining an AU Bank credit card. A link was thereafter sent to him through WhatsApp. Upon opening the link, the complainant entered his mother’s name and the particulars of his existing credit card into an online form.

The complainant was allegedly informed that the credit limit of the proposed new card would remain the same as his existing card. An application was then downloaded onto his mobile phone, following which he started receiving one-time passwords. Two unauthorised deductions of ₹49,730.71 each were subsequently made from his account, causing a total loss of ₹99,461.42.

The petitioners argued that the FIR had initially been registered against unknown persons and contained no direct allegation of cyber fraud against them. Their alleged involvement surfaced only during the subsequent investigation. They submitted that respectable members of society had intervened and the dispute had been amicably resolved. The complainant had allegedly acknowledged full satisfaction after the petitioners agreed to compensate him.

It was also argued that continuing the criminal trial would prejudice both sides and adversely affect the petitioners’ future prospects. According to the petitioners, quashing the proceedings would allow them to return to constructive lives while also protecting the complainant’s financial interests.

The State opposed the petition and submitted that the investigation had indicated the involvement of five persons. The identity of three persons could not be established, and the final report had been presented only against the two petitioners. It was therefore contended that the alleged settlement was merely a partial compromise and could not terminate proceedings concerning a wider cybercrime operation.

The High Court relied upon Parbatbhai Aahir alias Parbatbhai Bhimsinhbhai Karmur and Others v. State of Gujarat and Another, (2017) 9 SCC 641, which requires courts to consider the nature, gravity and societal impact of an offence while deciding whether criminal proceedings should be quashed on the basis of settlement. Although non-compoundable proceedings may be quashed in appropriate cases, economic and financial offences affecting society stand on a different footing from private disputes possessing a predominantly civil character.

Examining the allegations, the Court observed that the complainant had been induced to provide his credit-card information through a link sent to his mobile phone. The defrauded amount was allegedly credited to the beneficiary account of NoBroker Technologies Solution Pvt. Ltd. and later transferred to a UPI account. There was no prior acquaintance or history of financial dealings between the petitioners and the complainant that could give the matter the character of a pre-existing private or commercial dispute.

The Court noted the rapidly expanding threat presented by cybercrime. Such offences affect not merely the account of an individual complainant but the integrity and reliability of the entire digital financial ecosystem. Since online fraudsters can target multiple persons across different jurisdictions through technologically sophisticated methods, a monetary settlement with one victim does not erase the broader public wrong.

The Court also treated the non-arrest and unidentified status of three other alleged participants as a material circumstance against quashing. Since only the two petitioners had been charge-sheeted despite the alleged involvement of five persons, the compromise did not comprehensively resolve the criminal transaction under investigation. Relying upon the Division Bench decision in Rakesh Das v. State of Haryana and Another, CRM-M-48043-2023 (O&M), decided on 12 November 2024, the Court held that the partial nature of the compromise provided an additional reason for refusing relief.

Decision: The Punjab and Haryana High Court dismissed the petition seeking quashing of FIR No. 227 dated 22 August 2025 under Section 318(4) of the Bharatiya Nyaya Sanhita, 2023. It held that cyber fraud is not a private wrong capable of being extinguished merely by compensating the complainant and that quashing the proceedings would be contrary to the interests of justice and society. The involvement of three additional unidentified and unarrested accused, making the settlement a partial compromise, further weighed against the petitioners.